Perpetual Inventory Using FIFO

Beginning inventory, purchases, and sales data for portable game players are as follows:

Apr. $1$ Inventory $180$ units at $$40$

$10$ Sale $140$ units

$15$ Purchase $210$ units at $$42$

$20$ Sale $170$ units

$24$ Sale $60$ units

$30$ Purchase $240$ units at $$46$

The business maintains a perpetual inventory system, costing by the first$-$in$,$ first$-$out method.

Question Content Area

a$.$ Determine the cost of the merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit $3.$ Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Merchandise Sold Unit Cost column and in the Inventory Unit Cost column.

Perpetual Inventory Account

First$-$in$,$ First$-$out Method

Portable Game Players

Date

Quantity

Purchased

Purchases

Unit

Cost

Purchases

Total

Cost Quantity

Cost of

Merchandise

Sold Cost of

Merchandise

Sold

Unit Cost Cost of

Merchandise

Sold

Total Cost

Inventory

Quantity

Inventory

Unit

Cost

Inventory

Total

Cost

Apr. $1$ fill in the blank $65$e$2$f$1$f$5$e$052051\_1$

$180$

$fill in the blank $65$e$2$f$1$f$5$e$052051\_2$

$40$

$fill in the blank $65$e$2$f$1$f$5$e$052051\_3$

$7,200$

Apr. $10$ fill in the blank $65$e$2$f$1$f$5$e$052051\_4$

$140$

$fill in the blank $65$e$2$f$1$f$5$e$052051\_5$

$40$

$fill in the blank $65$e$2$f$1$f$5$e$052051\_6$

$5,600$

fill in the blank $65$e$2$f$1$f$5$e$052051\_7$

$40$

fill in the blank $65$e$2$f$1$f$5$e$052051\_8$

$40$

fill in the blank $65$e$2$f$1$f$5$e$052051\_9$

$1,600$

Apr. $15$ fill in the blank $65$e$2$f$1$f$5$e$052051\_10$

$210$

$fill in the blank $65$e$2$f$1$f$5$e$052051\_11$

$42$

$fill in the blank $65$e$2$f$1$f$5$e$052051\_12$

$8,820$

fill in the blank $65$e$2$f$1$f$5$e$052051\_13$

$40$

fill in the blank $65$e$2$f$1$f$5$e$052051\_14$

$40$

fill in the blank $65$e$2$f$1$f$5$e$052051\_15$

$1,600$

fill in the blank $65$e$2$f$1$f$5$e$052051\_16$

$210$

fill in the blank $65$e$2$f$1$f$5$e$052051\_17$

$42$

fill in the blank $65$e$2$f$1$f$5$e$052051\_18$

$8,820$

Apr. $20$ fill in the blank $65$e$2$f$1$f$5$e$052051\_19$

$170$

fill in the blank $65$e$2$f$1$f$5$e$052051\_20$

$40$

fill in the blank $65$e$2$f$1$f$5$e$052051\_21$

$7,140$

fill in the blank $65$e$2$f$1$f$5$e$052051\_22$

$40$

fill in the blank $65$e$2$f$1$f$5$e$052051\_23$

$42$

fill in the blank $65$e$2$f$1$f$5$e$052051\_24$

$16,000$

fill in the blank $65$e$2$f$1$f$5$e$052051\_25$

$40$

fill in the blank $65$e$2$f$1$f$5$e$052051\_26$

$42$

fill in the blank $65$e$2$f$1$f$5$e$052051\_27$

$1,680$

Apr. $24$ fill in the blank $65$e$2$f$1$f$5$e$052051\_28$

$20$

fill in the blank $65$e$2$f$1$f$5$e$052051\_29$

$42$

fill in the blank $65$e$2$f$1$f$5$e$052051\_30$

$800$

fill in the blank $65$e$2$f$1$f$5$e$052051\_31$

$20$

fill in the blank $65$e$2$f$1$f$5$e$052051\_32$

$42$

fill in the blank $65$e$2$f$1$f$5$e$052051\_33$

$16,800$

Apr. $30$ fill in the blank $65$e$2$f$1$f$5$e$052051\_34$

$240$

fill in the blank $65$e$2$f$1$f$5$e$052051\_35$

$46$

fill in the blank $65$e$2$f$1$f$5$e$052051\_36$

$11,040$

fill in the blank $65$e$2$f$1$f$5$e$052051\_37$

$20$

fill in the blank $65$e$2$f$1$f$5$e$052051\_38$

$42$

fill in the blank $65$e$2$f$1$f$5$e$052051\_39$

$800$

fill in the blank $65$e$2$f$1$f$5$e$052051\_40$

$240$

fill in the blank $65$e$2$f$1$f$5$e$052051\_41$

$46$

fill in the blank $65$e$2$f$1$f$5$e$052051\_42$

$11,040$

Apr. $30$ Balances $fill in the blank $65$e$2$f$1$f$5$e$052051\_43$

$15,220$

$fill in the blank $65$e$2$f$1$f$5$e$052051\_44$

$11,840$

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Note that this exercise uses the perpetual inventory system. FIFO means that the first units purchased are assumed to be the first to be sold. Therefore, ending inventory is made up of the most recent purchases.

Question Content Area

b$.$ Based upon the preceding data, would you expect the ending inventory to be higher or lower using the last$-$in$,$ first$-$out method?

Lower

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Consider the cost of inventory when purchased and when sold. Remember FIFO reports higher gross profit, net income, and ending inventory than the LIFO method when costs $($prices$)$ are increasing.

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Partially correct